BA 420 Week 8 Discussion: Impact of Restructuring an Organization

Impact of Restructuring an Organization


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Impact of Restructuring an Organization

Organizations have to make necessary changes in order to thrive well in the dynamic environment. With changing operating conditions and changing times, restructuring is inevitable if an organization wants to maintain optimum performance. Organizational restructuring entails reviewing organizational setup and making the necessary changes. Factors that cause restructuring range from cutting down costs and minimizing losses to growth and diversification. One way of restructuring is downsizing- this keeps the wage bill under control through cost cutting.

One of the consequences of restructuring is employee uncertainty as they question their job security. It is a known fact that employee morale, well-being and health decline when an organization is restructured. The restructured organization can restore the employees’ confidence and calm their worries by being receptive, effectively communicating and listening to their employees. These encourage productivity and maintain high morale.

The first thing the organization is supposed to do is building on their relationship with the downsized staff. Hard-earned trust is easily lost no matter how long the employee has been part of the organization. This relationship can be restored through an open setting, with the senior officials being receptive. The organization should have communicated how restructuring process will be done and how its operations will be affected. Effective communication eliminates demoralizing rumors and speculation that infects an otherwise energized work environment (Karlsson, 2013).

When restructuring an organization, senior officials only focus on how employees leave but fail to consider the matter of who is laid off. Management level is concentrated on saving costs and expenses to the extent that they forget to factor in the organization’s future strategy, and the employees who will be tasked with its implementation. Downsizing can cripple an organization if the quality of employees that remain is substandard. Retaining the most qualified and competent staff prevents overburdening of staff as they can cope with emerging job pressure.


Karlsson, T. (2013). The Dynamics of Downsizing: The Swedish Tobacco Monopoly in the 1920s. Enterprise & Society, 14, 829-853.